Friday, February 10, 2006

Good, Bad and Really Ugly News

- The government intends to privatize both the country’s mobile operators, (MTC Touch and Alfa), and its fixed line operator, (Ogero which will become Liban Telecom), before June 2006, according to the Lebanese Minister of the Economy, Sami Haddad.

- The Beirut Stock Exchange recovered today some its value after a 10 percent fall caused by the Achrafieh riots and profit tacking.

- Solidere shares, which were being traded at around $26 fell to $22.39 on Wednesday, gained 3.7 percent today and closed at $23.3.

- When EFG Hermes offered to sell $90 million worth of Solidere shares at $22 (the average price of the share over a month), it got over $300 million worth of subscriptions. Over 90 percent of the sale went to Gulf investors.

- Banque Du Liban et D’Outre Mer (BLOM) completed the sale of 3 million Global Depositary Receipts (GDRs) at $92, 55 percent of which went to Gulf investors and 45 percent were bought by US based funds.

- The Ministry of Transportation is serious about the rehabilitation of the Riyak and Kleiat airports. A preliminary study will be ready in a couple of weeks.

- Mr. Jihad Azour, The Minister of Finance, launched today the "Bader" program for young Lebanese entrepreneurs with the backing of a group of succesful business people like Michel Abché (BHV stores), Marwan Kheireddine (Al Mawarid Bank and Virgin Megastores), Said Daher (Zara and Mango) and Robert Fadel (ABC stores). They intend to promote entrepreneurship at universities around the country, advise young entrepreneurs and set up a venture capital fund.

- The reforms planned for Electricité du Liban will take years to implement.

- The value added tax (VAT) that is currently at 10 percent will be increased to 12 percent very soon.

- The capital gains tax will be increased from the current 5 percent to 7 percent.

- In a couple of days the Interior Ministry intends to reveal the names and pictures of the individuals involved in the Sunday riots in Achrafieh.

- Johnny Abdo, the Lebanese ex-spy chief and a Hariri family advisor, has told a prominent politician that the next assassination attempt will be against a politician cum journalist.

5 Comments:

ghassan said...

The only way to characterize valuations in ALL the equity exchanges in the Middle East is a single word "Bubble". That bubble rests on the exssesive liquidity resulting from the high price of oil. All bubbles end, some deflate as to manage a soft landing while others burst with devastating consequences. Those who get their highes from Russian rolette will hold equities in Arab bourses at these levels.

first the lebanese economy is bunkerised by the central bank, so all the economical situation is artificial, reflected by a huge gap btw nominal and real interest rates.the best way to see it is to go to the bank , asking for half a million dollars of loan and compare this interest rate with the interest rate u would get on the same amount in the same back if u re depositing.

of course to calcule the difference we do it through the foreign currencies and bla bla bla.

why ? bcz the lebanese pound is pegged to the USD when it would be better to pegg it to a basked of currencies reflecting the economical relations that lebanon has with the foreign countries.

this artificial situation is also reflecting itself in the Beirut stock exchange etc...

if u re looking closer, the Central Bank (CB) has around 13 billions of dollars of foreign reserves, remove from it the foreign deposits, remove from it the illegal required reserves on foreign deposits by the lebanese banks (ex the money u have in dollars in your bank and that ur bank needs to deposits in the CB by law, illegal bcz usually the CB doesnt have any legal mandate to deal with the policy concerning Euro or dollars)u would get maybe 1 billion of dollars of net reserve in the CB

the Lebanese pound value today is therefore not reflected by its currency rate as the speculators dont have the bullets to shoot on it, which is in the long run a bad thing as the difference btw the nominal and the real interest rates will be increasing as the commercial and budget balance deficts are increasing.when the pressure will be too important , bcz the CB obliges commercial banks to deposit their foreign reserves, all the financial system in lebanon might collaps and today(s date is due for 2007 when lebanon will have to reembourse 5 billions of USD which they dont have.they can still make swaps as they are doing, but the country risk etc.. is going higher, and soon or later they ll face that situation ... in a real bad way and the population will be suffering.to remind u the debt per capita is the second highest one in the world for lebanon, taking in consideration also what is not accounted for it, and u ll beat the swahiland and get the highest one around the world.

so the lebanese banks need to protect their asses by investing abroad, this is why blom is selling gdr to gulf investors , or bank audi goes to egypt.

the Beirut stock exchange, let me joke about it? when someone was talking about the vatican to staline he was asking how many divisions the vatican has.well i ll just ask what is the market capitalisation of this stock exchange?1 dollars there invested would lead to an increase, this market is so small that currently this increase doesnt have any sense.

for the privatisations..whose gonna buy 2 networks that are right now outdated? and after all the story that were done with cellis and libancell, not serious investors but usually thoses interested by risky countries, not professionals of the telecom therefore.as well the EDL, need to be restructured to be privitized, i saw a study about it, their IT for ex dates from the end of the 60's, the average age of their employees is 57 whose going to buy them in case their prices are fixed and if there are risk of devaluation of the lebanese pound for the reasons i exposed b4? foreign companies learned from argentina this story and retreated from there, like suez or edf for the electricity, like telephonica for the telecom etc...we wont have interesting partners at this period of time

the governement needs to reform before restructuring, the governement needs to see the real values , the governement needs to handle its debt etc...

excellent comments for both and both right on the money.The Saniora and Saad and FM Fiasco is only begining, but wait until you see that Junblatt will be the first one to say: I told you so...and all the other lackies will be scrambling for cover. It ain't going to be a pretty sight....